Sell Where the Customers are Buying

I am constantly seeing young startup companies that try to sell in a particular way just because that is the way that the CEO or the VP of Sales did it in their former job. Then, they are surprised when the old technique does not work in the new environment. Only after they have experienced such a sales failure are they ready to hear some “Sales 101” advice.

There are really only two rules in selling.

You have to sell something that delivers more value to the customer than the price you are charging.

You have to sell where the customers are buying.

Rule #1 is very straightforward – if you don’t deliver more value than you want to charge, why would any rational purchasers pay the price? Most prices are set by looking at what competitors charge, or at what the items cost to create, or at some target return. The basic question for price is “what is the product worth to our target customer?” That is the absolute top price, and the actual price will probably be lower. If that price is not enough to be profitable, then the company needs a new product or it needs to find a different target customer in a different market segment – one that will gain more value from the product.

Rule #2 is less straightforward, but overlooked all too often. Sales and Marketing is hard. Messaging needs to resonate with the target customers, but that is only possible if the messages are getting to them. You cannot expect customers to come to you, but rather you have to go to them. That might mean selling in a store that you consider to be competitive to you. It will definitely mean paying close attention to purchasing habits and trends among your customers and being nimble to adapt to changing conditions.

An excellent example in the news today is Electronic Arts. Frank Gibeau is the president of EA Labels, the division at Electronic Arts that produces games. He was interviewed by VentureBeat about the changing environment for games, in which he said:

… our biggest retail partner, measured by dollar volume, in Q1 was not Best Buy or GameStop. It was Apple. That’s never happened before.

Try to get your head around that concept for a moment. The #1 retail partner for EA was not a game store. It was not an electronics superstore. It was not even EA’s own online download site. It was Apple. That company that we think of as the Mac, iPhone and iPad company.

Apple now has so many customers on its iOS App store and Mac App store that it is the largest marketplace for EA games. EA smartly saw the trend and has shifted its business away from disc-based distribution to digital distribution.